Correlation Between Enel Generacin and Sociedad

Can any of the company-specific risk be diversified away by investing in both Enel Generacin and Sociedad at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Enel Generacin and Sociedad into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Enel Generacin Chile and Sociedad De Inversiones, you can compare the effects of market volatilities on Enel Generacin and Sociedad and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Enel Generacin with a short position of Sociedad. Check out your portfolio center. Please also check ongoing floating volatility patterns of Enel Generacin and Sociedad.

Diversification Opportunities for Enel Generacin and Sociedad

0.0

Correlation Coefficient

Enel Generacin  Sociedad

Pay attention - limited upside

The 3 months correlation between Enel and Sociedad is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Enel Generacin Chile and Sociedad De Inversiones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sociedad De Inversiones and Enel Generacin is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Enel Generacin Chile are associated (or correlated) with Sociedad. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sociedad De Inversiones has no effect on the direction of Enel Generacin i.e., Enel Generacin and Sociedad go up and down completely randomly.

Pair Corralation between Enel Generacin and Sociedad

If you would invest  38,529  in Enel Generacin Chile on December 2, 2024 and sell it today you would earn a total of  5,354  from holding Enel Generacin Chile or generate 13.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Enel Generacin Chile  vs.  Sociedad De Inversiones

Enel Generacin Chile

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Enel Generacin Chile are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak technical and fundamental indicators, Enel Generacin exhibited solid returns over the last few months and may actually be approaching a breakup point.

Sociedad De Inversiones

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sociedad De Inversiones has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound forward indicators, Sociedad is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Enel Generacin and Sociedad

The main advantage of trading using opposite Enel Generacin and Sociedad positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Enel Generacin position performs unexpectedly, Sociedad can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Sociedad will offset losses from the drop in Sociedad's long position.

The idea behind Enel Generacin Chile and Sociedad De Inversiones pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.